Record EUTM licences or risk loss of rights

There are good reasons for recording a licence of an EUTM at the EUIPO. Absent recordal, those who acquire rights in an EUTM without knowledge of any licence affecting it are not bound by the licence. 

A recent EU General Court decision adds a further incentive for recordal. The Court held that a EUTM licence can only be recorded if the current registered owner of the EUTM consents. This means that, where an EUTM has been assigned prior to recordal of a licence, the new EUTM owner must consent to any subsequent application to record the licence. In most cases, obtaining such consent should not be a problem, but, as the licensee in this case found out,  sometimes it can be. 

What did the General Court say?  

The General Court held that an EUTM licence will only be recorded if the registered EUTM owner – at the time of the recordal request – states that they actively wish to grant a licence by signing (a) the recordal request, (b) a declaration (agreeing to the recordal), or (c) a completed transfer form or document (Article 13(3) EUTMIR).

In this case, the EUTM in question had been assigned to a third party before the licence had been recorded, and the new owner refused to consent to the licence being recorded or sign any of the above documents. Evidence that the new owner was aware of the licence and therefore bound by it under Article 27(1) EUTMR was insufficient (irrelevant, in fact). 

The Court held that the provisions governing whether or not a party is bound by a licence are separate from those governing whether or not a licence can be recorded. An assignee can be bound by a licence but prevent its recordal. This is important because if the assignee itself then grants rights in the EUTM to another party (by assigning, licensing or charging it), that other party would not be bound by the original licence assuming it was not aware of it.      

What's the rationale for the ruling?

It is not for the EUIPO to determine whether or not a new EUTM owner had knowledge of - and is therefore bound by - a licence under Article 27(1) EUTMR. Requiring their signature removes any doubt. 

In this particular case, the assignment of the underlying EUTM was not produced. Had the licensee been able to produce an executed assignment, and had it contained a clause stating that the assignee took the EUTM subject to all encumbrances, then that might have been sufficient to fulfil the Article 13(3) EUTMIR requirements (although the position is not completely clear cut).

What does this mean for you?

There are already good reasons for recording licences at the relevant Registry. Doing so puts third parties on notice of your rights. Absent that, a third party without knowledge of your rights is not bound by them. 

This case adds to the reasons for recordal. Delaying could mean, as a minimum, extra effort in securing any new owner's consent to the recordal and - at worst - scope for the new owner to block the recordal. While most assignees will want to maintain existing licences, some won't.

The risks can be mitigated by recording licences without delay and including appropriate provisions in licence agreements to ensure future owners of the mark are bound by the licence and consent to its recordal.